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Avoid frequent changes in tax laws: Ambani

BS Corporate Bureau in New Delhi

The constant changes and lack of continuity in tax laws created uncertainty over the applicability of difference tax provisions in the country, said Anil Ambani, vice-chairman and managing director, Reliance Industries, while speaking at a seminar on tax competitiveness organised by the Federation of Indian Chambers of Commerce and Industry in New Delhi on Wednesday.

"The constant amendments to taxation provisions, recurring changes in interpretation and application of the tax provisions, and the opacity and delays in the process of tax administration have led to the complexity of Indian tax laws. Per se, the laws are fairly straight forward," he said.

He also proposed that the Income-Tax Act should not be amended every year in the Union Budget.

"Let's have a stable taxation policy framework and let the Budget prescribe only the tax rates from year to year and not amend the Act," he pointed out.

Ambani also said the country would have to offer an even more attractive tax regime to attract large investments.

He also suggested that there was a need to take steps to revive the country's capital markets.

Pointing out the steps that would bring in vibrancy in the country's capital market, he suggested the removal of taxation of dividends, abolition of capital gains tax and the introduction of tax deduction liked to investments made in equity shares.

"I am confident that such measures, if introduced, will go a long way in restoring vibrancy to the Indian capital market," Ambani said.

Advocating that the complexity of local and central tax laws are discouraging investments in the country, he said that the creation of a unified market in the country, devoid of multiple local taxation policies and replaced by a central VAT would go a long way in accelerating the pace of investments in the country.

He also suggested that there is a need to increase the contribution of the services sector to taxes, in line with the increased share of services in GDP and said that the government is heavily depending on the industrial sector to reduce its deficits.

Ambani also called for significant cuts in excise duties and sales tax across the board.

"Today the cascading effect of customs duty, excise duty, sales tax and other local levies account for over 35 per cent of the final price to the customer. This is double the level prevailing in a country like the UK," he said.

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